A brother and sister used a tax-preparation company in Lexington to file false tax returns and get rapid-refund loans that they used to buy expensive clothes, a deluxe trampoline party and an overnight stay at the Grandover Resort in Greensboro, according to a news release and court documents.
James Ernest Gandy Jr., 36, of Dunn, and his sister, Jamie Victorious Gandy, 40, of Winston-Salem, both pleaded guilty in May to federal charges of making false claims against the United States, making false statements to a bank and aggravated identity theft. On Friday, U.S. District Judge Catherine C. Eagles sentenced James Gandy to four years and three months in prison and ordered him to pay $129,017 in restitution. He also has a forfeiture money judgment against him in the amount of $62,088.
Eagles sentenced Jamie Gandy on Tuesday to three years and three months in prison and ordered her to pay $139,254 in restitution. She also placed a forfeiture money judgment of $62,088 against her. Both James Gandy and Jamie Gandy will be placed on three years of supervised release when they get out of federal prison.
Prosecutors accused the brother and sister of obtaining personal information from people and using that information to file false tax returns without those people's permission or knowledge in a scheme to get rapid-refund loans. They would then load the refund-loan money on a debit-like card and spend the money for their own benefit.
In court papers, federal prosecutors said Jamie Gandy worked as a supervisor at Liberty Tax Services in Lexington. She prepared and reviewed tax returns. The tax preparation business offered rapid-refund loan products from Republic Bank and Trust Company.
If customers expected a tax refund but wanted to get the money faster, they could apply for a rapid-refund loan. Republic Bank would provide the amount of the refund to the customers for a short period of time and collect the money for the loan when the customers got the refund from the Internal Revenue Service. Customers could spend the refund loan money from Republic on a NetSpend card, which is essentially a debit card. Up to $1,300 could be loaded up on the card.
The owner of Liberty Tax Services focused on business development and left the day-to-day tax preparation services to Jamie Gandy. After Jamie Gandy became a supervisor, her brother, James Gandy, would drive from Dunn to Lexington. Lexington is about two hours northwest of Dunn. James Gandy operated a business in Dunn that provided shipping pallets.
Federal prosecutors said James Gandy would get personal information from people, including employees at his company. Jamie Gandy would prepare and file the tax returns, using false financial information to ensure large refunds. The people whose names were used had no idea that their personal information was being used to file false tax returns. Some of the tax returns listed false dependents, who were real people.
Jamie Gandy, prosecutors said, would then apply for rapid-refund loans, load the money on the NetSpend cards and then both Jamie Gandy and James Gandy would use those cards to spend money for their benefit.
James Gandy used that money to buy a deluxe trampoline party for his family in Greensboro and bought an overnight stay at the Grandover Resort in Greensboro.
Federal prosecutors said in court papers that the owner of Liberty Tax Services became suspicious of how often James Gandy came up to Lexington to visit his sister and also noticed that Jamie Gandy's lifestyle had changed.
"He saw that she was wearing expensive clothes and had bought a new car," federal prosecutors said in court papers. Jamie Gandy claimed the new lifestyle was because her brother's business was successful and her husband was making a good salary working for her brother.
But then the owner started getting complaints from customers that they had not received their refund money. Other customers wondered why their tax returns were prepared in Lexington when they lived in Dunn. The corporate office told the owner that there were indications of fraud and that the Liberty Tax Office was using NetSpend cards at an "unusually high rate."
The corporate office did an audit, which showed numerous fraudulent tax returns had been filed at Liberty Tax store in Lexington under Jamie Gandy's name. The owner contacted federal and local law enforcement to investigate.
"These defendants thought they had a clever scheme to thwart the IRS and steal from American taxpayers," said Matthew D. Line, IRS Criminal Investigation Special Agent in Charge, said in a news release. "IRS-Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds."
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